The following amendments may be discussed together because they are consequential. Amendments Nos. 1 and 2 are consequential on amendments Nos. 14 and 26. Amendments Nos. 23, 27, 34, 36 and 40 are also consequential on No. 26. In addition, amendment No. 15 is related to Nos. 26 and 34.
SECTION 2.
I move amendment No. 1:
In page 3, between lines 17 and 18, to insert the following:
"‘‘agricultural produce " has the meaning assigned to it by section 8; ',
‘" agricultural service " has the meaning assigned to it by section 8; ',".
It would be helpful if we could have an explanation as to why these amendments are necessary. This might save a number of questions later.
I propose to give a short explanation of each amendment and if any Deputy has a query on details, we could take them as they come up. Amendment No. 1 adds two further definitions to those contained in section 2 of the Bill. These definitions are introduced in connection with the restoration of the 1 per cent flat-rate relief in respect of supplies of goods and services by farmers, as provided for in amendment No. 26. Amendment No. 2 adds three further definitions to those contained in section 2 of the Bill. These definitions are also introduced in connection with the restoration of the 1 per cent flat-rate relief in respect of supplies of goods and services by farmers, again as provided for in amendment No. 26.
Might I ask the Minister does this mean that the relief could not be given unless the definition was included?
Yes, that is correct.
It is to facilitate giving the relief that the definitions are added?
That is right. Amendment No. 14 is consequential on the restoration of the 1 per cent flat-rate relief provided for in amendment No. 26.
Amendment No. 14 is consequential on the flat-rate relief?
On introducing the 1 per cent flat-rate relief. It is consequential but, if the Deputy wishes we can go through them in detail, or if there is any detail he wants to raise on them he may do so. At present I am giving an outline of what each amendment is doing. Amendment No. 15 excludes horses and greyhounds from the definition of agricultural produce for the purpose of excluding them from the flat-rate credit. Supplies of horses and greyhounds are VAT exempt. It is not intended that they should, in addition to the benefits of exemption, also benefit from the flat-rate credit.
Amendment No. 23 enables taxable persons purchasing agricultural output or services from unregistered farmers to claim a tax credit in respect of the amount of the flat-rate addition shown on the purchase documents duly prepared. The amount of the proposed addition, which is provided for in amendment No. 26, is 1 per cent of the net price. This credit will be claimed by the purchaser, together with the tax on his other purchases, in his returns submitted to the Revenue Commissioners and will be allowed to him either as a set-off against tax due on his sales or, in the case of meat factories and other zero-rated food processors, by direct repayment by the Revenue. The effect of the relief will be to enable prices paid to agricultural producers to be increased by 1 per cent.
Amendment No. 26 inserts a new section in the Value-Added Tax Act to provide for the restoration of the 1 per cent flat-rate credit to farmers in respect of the sale of their agricultural output and the supply by them of agricultural services.
Amendment No. 27 is merely consequential on amendment No. 26, that is, consequential on the insertion by amendment No. 26 of section 12A in the Act and ensures that section 13 is inserted after 12A rather than 12.
Amendment No. 34, with the exception of paragraphs (e) and (h), is concerned with the restoration of the flat-rate credit to farmers. It makes provision for invoices and other documents in connection with the operation of the relief. Paragraph (e) reproduces, with minor textual changes, section 14 of the Bill which is being deleted as a result of this amendment. Paragraph (h) is concerned with relief for foreign traders.
Amendment No. 36 provides for the statutory penalty of £20 for (a) failure to issue a flat-rate invoice when required to do so by the new section 12A of the Act, which is inserted by amendment No. 26; (b) the issue by a flat-rate farmer of an incorrect invoice or the issue of a flat-rate invoice by any person other than a flat-rate farmer and (c) in the case of a body of persons the secretary is also liable to a separate penalty of £20.
Amendment No. 40 provides for the adjustment of contract prices when the flat-rate is first introduced. It also inserts a provision along the lines of section 35 (2) of the VAT Act providing that an amount of flat-rate addition shown separately on a flat-rate invoice is deemed to be part of the consideration for the purposes of its recovery by the farmer. There are just brief explanations of what the amendments are proposing to do.
Are we right in thinking that the main amendment here is amendment No. 26?
Yes, and No. 34.
That is correct.
Could we jump ahead to amendment No. 26 because it is the main amendment? Amendments No. 1, 2, 14 and 15 are related and are only small definitions pertaining to amendment No. 26. Could we start with amendment No. 26?
Yes. We are discussing amendments Nos. 1, 2, 14, 15, 23, 26, 27, 34, 36 and 40 together.
I would like a more detailed explanation as to why amendment No. 26 is being put before us. We have been told in technical terms why but we have not been told why in political terms, and this is of substantial importance politically. On 11 October I asked the Minister for Finance a question about the effects of the Value-Added Tax (Amendment) Bill and the answer I received as reported in the Official Report, Volume 308, column 47 was:
The number of traders becoming liable to register for VAT under the Value-Added Tax (Amendment) Bill as introduced is estimated at 2,500, and the net increase in revenue at £1 million in a full year.
As a result of amendments which I have proposed to the Bill it is estimated that about 900 people at present registered will become entitled to deregister and the increase of £1 million will be converted to a net relief of about £17.65 million in a full year.
The Minister went on to give details of the reliefs and explained that the restoration of the 1 per cent flat-rate credit to farmers is responsible for the greater part of that or, in fact, £17½ million gross. This followed an announcement which was made by the Minister for Agriculture, Deputy Gibbons, featured on the front page of the Irish Independent to the effect that he was giving an extra £17½ million to the farmers by virtue of this Bill. We must ask why this is being given at this stage because the amount involved is so substantial that it virtually amounts to a mini-budget. It seems very strange, first of all, to bring in a Bill which would, as introduced, provide an extra £1 million to provide Government services capital works and so on and after its introduction to convert it into something which will effectively cost the taxpayer in revenue foregone, almost £18 million. I would like a comment on that.
There are two basic points I must make about this. The restoration of this 1 per cent flat-rate credit to farmers was an item in the Government's election manifesto which was accepted by the people. Secondly, as a result of the abolition of the flat-rate credit, farmers were the only people who were trading subject to VAT and who, as a result of the changes made under the last Government were not entitled to a refund of the VAT they paid on their inputs. I have always taken the view that, apart from any political aspects, the effect of doing that was to nullify to some extent the whole VAT system, because the basic principle of the VAT system is that a manufacturer or a trader pays VAT on his inputs and then charges VAT on his outputs and deducts one from the other so that, in effect, he does not pay VAT and the ultimate payer of the VAT is the ultimate consumer. The refusal of a flat-rate credit to farmers defeats the whole object of the VAT arrangement. I should, perhaps, explain that the flat-rate credit is arrived at on the basis of a calculation based on the average amount of VAT paid by farmers on their inputs. It is impossible to work out a system where the figure is precisely right as it is in the case of traders. It seems, therefore, that to make the VAT system work as it is intended to work, and also for the political reason I mentioned, we are fully justified in restoring the 1 per cent flat-rate credit.
Is the Minister saying that the reason for restoring the credit is because with the situation un-amended farmers would be paying VAT on inputs but as they were not liable for VAT on outputs they had nothing to offset that VAT against?
Yes, the effect would have been that they would have been paying VAT on certain inputs and would have had no way of recovering it.
They had no way of recovering it because they were not liable for VAT in the output area?
No, because they were not registered for VAT.
It can hardly be denied that this is, effectively, whatever its relationship to the theory of VAT, a tax on the farming community which was being paid by them for some years and which is now being removed. Has the Minister any indication of how much was collected from the farmers since this arrangement came into operation?
Does the Deputy mean over a particular period?
Since it was introduced by the previous Government.
I do not have figures immediately available but the reply to Deputy Horgan's question in the Dáil which was quoted gives some indication of the magnitude, at present anyway.
I cannot understand why if this was in the manifesto it did not appear in the Bill when the Bill was published. Does that imply that whereas it was in the manifesto the Government were not committed to a timetable regarding restoration? In other words, have they made up their minds in the short-term?
Apart from doing it this way in the Bill it could be done by a form of order but the Deputy will be aware that there are a number of changes involved in the whole VAT system in this Bill. Having studied the position arising out of these changes and arising out of the EEC sixth VAT directive, the Government decided that all the changes, including this one, should operate together. In my budget speech I indicated that the restoration of the 1 per cent flat-rate credit would operate during the tax year 1978-1979. There were alternative ways of dealing with the matter but realising what would be the consequences of this Bill—there are pluses and minuses in it for various people including farmers—it was decided that the most equitable way of proceeding was on the basis that all the provisions should operate together. By incorporating them in this Bill, which will not operate until an order is made but the likelihood is that it will operate from 1 January next—I say " likelihood " because this depends to some extent on what is happening in other member states—the intention was so far as possible to have all the provisions, including the 1 per cent flat-rate credit, operate from the same date. To achieve that the best way to proceed appears to be to incorporate it in the Bill and, as I have indicated, the final decision on the commencement date has not been made yet.
Is it possible that individual sections can be brought in by order or will the whole Bill be brought into operation by way of a single order?
I understand that the whole Bill will be brought into operation by way of an order.
Sections, therefore, will not be brought in separately.
No. Perhaps I should mention that in the event of the legislation not becoming operative on 1 January or, indeed, not becoming operative within the tax year—that is unlikely although a possibility—we would have to consider reverting to the original position and bringing in certain items such as this 1 per cent flat-rate credit by way of order rather than by way of the Bill.
I support the Minister's amendment because it must be remembered that the 1 per cent VAT credit to farmers operated until the 1976 Finance Act when it was removed by the previous Government. In effect that move imposed further taxation on our farmers irrespective of valuation. The original idea behind this 1 per cent credit was to compensate farmers for VAT on inputs for which they were not allowed claim. The principle underlying VAT legislation is to impose a tax on value-added, but that principle was breached when the 1 per cent credit was removed from farmers. Therefore, I am in favour of the restoration of that 1 per cent. This will put about £17 million back into the hands of farmers.
Before we leave the section I should like to refer to various problems that arose in 1972 when the original VAT legislation was introduced. It was hoped, then, that farmers would sign dockets and give them to traders so that they could avail of the 1 per cent but that did not happen. I note that in accordance with section 26 farmers are obliged again to submit invoices. As the similar provision in the original legislation did not work, I should like to hear the reasoning for repeating it here.
Is the Deputy saying that it did not operate because the farmers would not operate it?
The position was that meat factories and other businesses made out the invoices on behalf of the farmers and allowed them the 1 per cent. Effectively, the business section claimed back the amounts concerned but it was intended originally that the farmers would make out the invoice and give it to the merchant whereas the reverse has been the practice.
There are certain aspects of this that are rather technical such as the one Deputy McCreevy has touched on, which I might explain for the Committee. The original provision which was introduced in 1972 but discontinued in 1975-1976 provided that the person who bought goods from an unregistered farmer had to prepare the documentation while all the farmer had to do was to sign his name thereon. The purpose of this procedure was to simplify matters for the farmer. There were complaints from farmers that effectively the 1 per cent credit had been discounted by the customer, that it simply scaled down the amount attributed to the tax-exclusive price. Of its nature, this allegation was not capable of being proved; it was only speculation. However, it is envisaged that by way of the system proposed in the amendments to the original Act, there will be an improvement in that respect because livestock is a large element in the farmer's output and, in handling documentation passing from the marts to the selling farmer or to the person who is buying, be he a dealer or a farmer, the marts will be operating on a 1 per cent VAT basis. This should provide that the VAT addition will be a genuine addition to the real price of the goods and that it will not be merely an illusory addition. Again, it is not something about which one can be certain but it appears to be the best way of dealing with the matter.
Would it not be the case that if a farmer did not sign the appropriate documentation, the loss would be his subsequently because he would not have any way of claiming back his credit?
The farmer was to receive the benefit because if he sold £100 worth of goods he was to charge the customer £101. At the same time he would be able to tell the customer that he, the customer, could claim the £1 back from the Revenue Commissioners by reason of his being registered for VAT whereas the farmer was not registered.
In this event would the farmer have to claim back?
No.
So that the farmer would have put £101 in his pocket.
Yes. The provision left the farmer totally outside the VAT system, his only function in that regard being to sign the invoice that the customer had prepared.
A great deal of difficulty arose over the signing of that piece of paper. It is fair to say that over 90 per cent of the farmers refused to sign it originally because they thought they would be caught in the tax net—this was before taxing farmers was even mooted. The technicalities of the system did not work because less than 5 per cent of the farmers signed that paper. Effectively the system works this way: the buyer prepares the paper, adds 1 per cent, pays the farmer 1 per cent and then claims back that 1 per cent.
As time went on they got more knowledgable about the system.
I agree with much of what has been said. There was a reluctance among farmers to sign, but what better system can we get? I agree that many small farmers now know more about the income tax system than they did, but where I come from small farmers' incomes are way below the amount needed to make them liable for tax. People who know and understand the tax system——
You could put them into a telephone kiosk.
I am putting the facts as I know them. Although the system proposed is not 100 per cent water-tight, I do not know if any Minister could bring in a watertight system. In my view, at the moment this is the best system we know and it is worth a trial.
When the 1 per cent credit was withdrawn it affected all farmers. This meant that farmers who were not paying income tax, because they had very small incomes, effectively paid tax. When the last Government removed this credit they effectively imposed taxation on farmers. The original idea was to compensate all farmers and it is a very good decision to restore it.
That is a very important point. Many people talk about taxing farmers. There are 30 per cent of farmers doing well and, according to recent statistics, the rest have not had an appreciable increase in their income.
It was a progressive tax to this extent: the larger the farmer the more likely he would be to avail of these goods and services and the more fit he would be to pay VAT. The smaller the farmer the less he would be a consumer of any goods and services VAT might be charged on. This would not affect him to the same degree, no more than it affects any consumer who walks into a shop, buys something and pays VAT on it. They cannot get the VAT back because they do not have a productivity output at the other end.
Deputy Horgan's point is that the larger farmer who would have a great deal of inputs and who would be buying a great deal of machinery will be registered for VAT. He will benefit and get back his tax every two months. The smaller farmer who is trying to develop is not registered for VAT and he suffers.
Is he not entitled to register for VAT or what?
It is too complicated for even the VAT collectors to collect all the small inputs which arise. That is why an estimate is made of what the inputs will be in such cases. Once you come to the more substantial volume of turnover, it is obviously in your own interests to have not just an estimate but the total from which you could be benefiting by getting a higher percentage back. That is why you will find that such farmers are registered.
It is true that the difficulties involved for somebody in business in a small way have been recognised from the beginning by providing thresholds and if one's business is under them one is not obliged to register. Both from the point of view of the small shopkeeper and the Revenue it is not practical to operate this system when the person involved is in business in only a very small way. What Deputy Woods said is true in relation to small farmers.
I would also point out that if one wishes to impose a tax on the income of farmers, then it should be done on the basis of income. It is wrong to do it by refusing to allow a refund of VAT on their inputs, something you allow to everybody else in the VAT system. It seems to be contrary to the whole principle and is a way of imposing a tax of one sort on farmers which seems to be wrong both in principle and in practice.
Could the Minister tell us if there are any relevant comparisons that could be made with other EEC countries in respect of the way they treat farmers for VAT? Is it related to the flat-rate credit?
I understand this system is used in most of the EEC countries, except Britain.
Are we saying that the situation in Britain is totally different from ours or that it is roughly similar to the situation which exists here before this Bill is brought into operation?
I understand that in Britain farmers are obliged to register for VAT and therefore they automatically get relief on their inputs.
In relation to the answer the Minister gave me in the Dáil the other day, could he give us some idea of who these 900 people are who are at present registered and who would become entitled to de-register?
Small shopkeepers with a small turnover.
But these are not the same people who will share the relief of £17½ million.
No, that is related to the restoration of the 1 per cent flat rate credit to farmers.
In the answer the Minister gave in the Dáil there seemed to be some connection between the deregistering of the 900 and the emergence of £17½ million in relief.
The reason they were put together is that the Deputy's question related to section 6 of the Value-Added Tax (Amendment) Bill and approximately how many persons would be brought into the VAT net. The section covers both.
Has the Minister any idea of the number and kind of farmers who will benefit from this?
As to numbers, I do not know.
Would it be every farmer except those registered for VAT?
That is correct, roughly 150,000. I understand there are only something like 300 farmers registered for VAT.
And they are very large farmers.
In the case of the 300 farmers registered for VAT repayment, on account of their inputs being so high and the VAT being charged to them, even compensating them by the 1 per cent flat-rate credit, VAT on their inputs is far greater than what they would get out of this 1 per cent.
I understand that what Deputy McCreevy says is correct.
On the basis of those figures am I correct in calculating very, very roughly that the average benefit to each of the farmers who will get relief could be of the order of £100 a year—very approximately, just adding on noughts?
Approximately, yes. Of course, as the Deputy says it is an average.
Does the Minister really think that this is an unfair tax on the farming community on the basis of that argument?
Yes, I do. If one wants to tax in relation to income it is not the way to do it. Put it another way: why should other people engaged in business or trade, who are subject to VAT, be allowed refunds of VAT paid on inputs and farmers not be allowed?
But the farmers would have been entitled to the refund if they had taken the option of registering for VAT, would they not?
One of the problems here is the fact that there is such a multiplicity of small farmers in this country. That is one of the main differences between here and Great Britain. In Great Britain, where it has been mentioned that all farmers have to register for VAT, they do not have the same small farm problem. There would be considerable difficulty experienced in collection if all these small farmers registered. It would cause very considerable difficulty for the VAT inspectorate collecting such tax.
That is undoubtedly true. I think the system would not be able to cope.
It just could not be done because one would need to live in the areas where these small farmers operate. It is just not on.
Is there not another way of dealing with it? Their valuation for tax purposes has been reduced now to £60; is that not the valuation floor for tax purposes?
Yes.
As there is a threshold for small businesses would it not be possible to insist that if a farmer is below that, if he is not registered, that a threshold be introduced for the farming community as well?
It is one thing to have a threshold like £60 valuation for income tax purposes. You can then deal with farmers above the threshold on the income tax basis but when you are dealing with VAT you are dealing with different kinds of transactions and it is operated as between the farmer and whoever he is dealing with. It is not something that the Revenue Commissioners are overseeing; they are not overseeing every transaction. It would mean the person dealing with a farmer would have to be satisfied as to whether he was above or below, say, the £60 valuation. I do not think it would be workable to have a system of that kind. I think that reinforces the point I was making, that if you want to impose a tax on farmers, basically an income tax, you have to do it on the basis of an income tax, when the Revenue Commissioners can deal directly with the farmers. I do not think it is feasible to do it by way of expecting people engaged in ordinary business transactions with farmers to distinguish between whether the farmer is above or below a particular valuation.
Might I ask the Minister would I be right in thinking that there could be people below the £60 valuation who are dealing in so much machinery they are registered already for VAT? As I see it the two things are entirely different.
That is certainly possible but I do not know whether it happens.
I doubt that it would be possible. People who would be below the £60 valuation, who would be in big business farming with a great deal of machinery and so on, may have registered for VAT already. They are two different things.
If they have, they are catered for.
Exactly. It bears out the point the Minister was making—that the valuation would not work in that line. I may be wrong but I am of the opinion that there are people registered from VAT who are under the £60 valuation for other reasons.
I cannot say it is true but it is certainly possible.
I am merely arguing the principle that if a threshold can be introduced for small traders the snag in dealing with people like that is that it is then as relevant for small traders as it is for small farmers. It is the person dealing with the small trader who under this Bill will now be subject to the threshold—which has gone up from £1,800 to something like £3,000. It is as difficult for the person dealing with them to ascertain whether they are above or below that figure, as it would be for somebody dealing with a farmer to find out whether he was above or below whatever is the threshold. I am not suggesting the £60, but there is a threshold principle involved anyway.
That is true but, in those cases, the Revenue Commissioners are dealing directly with the shopkeeper to ascertain whether he is above or below the threshold. In effect I presume that what Deputy Barry has in mind is that above a certain valuation a farmer would be obliged to register for VAT. I presume that is what he has in mind.
That is right. There may be some way of doing it besides by valuation.
Deputy McCreevy touched on a point in this connection which may be relevant, that is, that if every farmer or, indeed, very many farmers registered there would not be much doubt that some of them certainly could get more than the 1 per cent refund of VAT on average provided for here. That is another consideration from the point of view of the Exchequer to bear in mind. I believe it all boils down to the fact that this is not a way, in effect, to tax income and should not be used for that purpose. One gets oneself into all sorts of anomalies and administrative difficulties if one tries, in effect, to tax income through denying VAT refunds.
It is important to bear in mind also that this 1 per cent is, as I understand it, related to the normal inputs. If an unregistered farmer buys machinery—which can be quite expensive—then if he is unregistered the tax man wins.
That is true.
Whereas if he were registered he would win.
That is correct.
You may well find that you are back to what Deputy Callanan was saying, that as farmers become more sophisticated in relation to tax generally and the handling of the administration, they will find it worthwhile to be registered.
It is only fair to point out that if all farmers registered for VAT the loss to the Exchequer would be considerable.
That is correct. It would be enormous.
The £17,500,000 now being given back to farmers would be a pittance compared with the situation if all farmers registered for VAT, as registered customers, when the amount of refunds they would be getting every two months would be so considerable the Finance Bill would have to be changed somewhat. That is factual at present. Therefore I am not in favour of the threshold principle. Value-added tax has to do with the principle of taxing on value-added, the increase that the farmer or producer adds to his inputs. In fact, what he does is to pay tax on the added-value placed on them. Even though the idea of a threshold is one that might commend itself in other respects, it seems to me to be getting a long way away from the principle of value-added tax and I would not be in favour of it.
We have already abandoned the principle for small traders.
No, because there we were talking about turnover. Turnover has nothing to do with income. When the Deputy says a £60 threshold he is thinking about a farmer who is making £X thousands.
I should probably have said valuation. But there should be some other means of putting in a threshold. My thinking behind this would be that the more farmers adopt a business approach and are registered for VAT the better. I mean that in their own interests apart from the fact that they would make money as Deputy McCreevy has said, at present. Naturally the Minister would not have much interest in that. The more businesslike the approach of farmers to things like tax and to their general operations, the more benefit to the country in the long run.
I agree with Deputy Barry. Most of us wish to make the farmers more progressive. A lot of farmers are losing money because they are not registered for VAT, and the Exchequer is gaining in the long run. The small farmer should be convinced that he should register.
The option is open to the farmer to set his own threshold because if the rebate he claims is 10 per cent, or 20 per cent on machinery, and he sells goods at a 1 per cent VAT rate, if he does his figures right it will become clear to him that if he is registered he could well gain.
I am astonished by the idea that there are millions of pounds flowing in to the Minister's coffers every month that would not flow in if farmers were registered.
I would not say millions.
Deputy McCreevy said that the £17½ million was only a pittance to what would be the actual recoupment to the farming community if they were registered. I look forward to reading the report of this debate in the Farmers’ Journal.
I must underline something Deputy Barry said. I wonder if this amendment to the Bill is going in the right direction because it is important for all sorts of reasons that more farmers operate in a more businesslike and orthodox fashion not least because it will enable us to deal with the complex of very political questions, questions like farmer taxation, on a real basis instead of on the basis of figures taken out of the air, notional this and notional that. If there is anything that annoys the urban taxpayer in relation to the whole question of farmer taxation, it is that the degree to which farmers are taxed seems to be at various points unrelated to their real income because it is based on notional things. We have notional things because of the difficulty of estimating farmers' real income. Therefore I am in favour of moves away from notional things. The problem about the 1 per cent flat-rate credit is that it is a notional thing. Some kind of threshold system like that advocated by Deputy Barry would lead us away from the notional idea towards a system where a fair taxation system would be seen to be fair. At the moment it may or may not be fair but because there is no hard mathematical basis on which it can be proved to be fair, people adversely affected by it assume it is unfair.
All of us agree, some perhaps for different reasons, that the more businesslike our farmers can be in their accounts and in determining, whether from their own point of view or from the Revenue point of view, what their true income is, the better, but I adhere to the view I already expressed that if what one is concerned with is imposing as fair a tax as possible, almost by definition, we are talking about income tax. The method of using the VAT system is not appropriate for the various reasons I have mentioned. Furthermore, while Deputy McCreevy and others are correct in practice in saying that if all farmers were registered it would cost the Exchequer money. I must point out that in theory they are not correct because the 1 per cent is worked out statistically on the basis of the average for all farmers. Theoretically the effect on the Exchequer should be the same.
I own a small farm of 50 acres with a £45 valuation and I am taxed on it because of my other salary. I asked my accountant should I opt for the notional system or the accounts system and he said I should opt for the accounts system. I have gained a lot more by opting for that system.
I can bear out what Deputy Callanan is saying. It is the experience of the Revenue Commissioners that, contrary to popular belief, the proportion of farmers who have been opting for the accounts system is surprisingly high.
That is a very good thing.
Amendment agreed to.
I move amendment No. 2:
In page 3, between lines 19 and 20, to insert the following:
"‘" farmer " has the meaning assigned to it by section 8; ',
‘" flat-rate addition " has the meaning assigned to it by section 12A; ',
‘" flat-rate farmer " has the meaning assigned to it by section 12A; ',".
Amendment agreed to.
Question proposed: " That section 2. as amended, stand part of the Bill."
I think I understand now how to get the definition of a taxable person.
Section 6 reproduces section 8 of the VAT Act which is concerned with taxable persons.
I was trying to work this out over the weekend and got nowhere.
Section 6 of this Bill inserts a new paragraph in section 8 of the principal Act. It inserts new paragraphs in places of existing paragraphs 1, 2, 3, 7, 8 and 9. Paragraph 3 indirectly defines taxable persons. Section 6 (1) says:
A person who, otherwise than as an employee of another person, engages in the supply, within the State, of taxable goods or services in the course of business shall, in addition to the persons referred to in section 4 (5) and subsections (2) and (2A), be a taxable person,
Subsection (1) of section 6 is broadly the main definition of taxable persons. Subsection (2) deals with taxable service which would be treated as supplied abroad and so on.
From my reading of the section there are two distinct lines of thought. A taxable person is one who supplies taxable goods but are " taxable goods " defined in this Bill or is the position the same as it was in the 1972 Act?
They are defined in the original VAT legislation.
In other words, the definition remains the same?
Yes.
Section 8 (3) of the original Act refers to " an accountable person ". Is he the same as a taxable person?
Yes. This is the phraseology used in the directive so it was considered best to follow that. Quite a number of the amendments are simply for the purpose of changing the terminology to that used in the directive.
Question put and agreed to.